JUDGMENT
1. Petitioners seek by this petion quashing of orders refusing refund with regard to excise duty paid for the period 1-3-69 to 28-2-70 and also had futher prayed for inerim relief of prohibition, prohibiting the Respondents from recovery of the duty upon the calculation of price which included fringht, marketing expnses and packing expenditure of the articles which the petitioners manufacture being Vansapati, a vegetable product.
2. For the evenrtual order, we are proposing to mention, for facts need be stated as are not in dispute.
3. The petiitoner which is a public limited Company manufactures the vegetable product from vegetable oils like groundnut oil, cotton seed oil, tilli oil, soyabin oil, etc., by refining the same and by adding ceratin viramins. The product is packed and marketed in tin containers of standard specified sizes being of 2 kgs and 16.5 kgs. and the product is subject to levy of excise duty under the provisions of the Central Excises and Salt Act, 1944 (hereinafter called the Act), The duty for the petitioners folowed by claim of refund, as is evidenced by several aplications appendedn to this petition, the same being Annexure 5 for the period 1-3-69 to 31-5-69, Annexure 7 for 1-6-69 to 31-8-69 Annexure 9 for 1-6-69, to 30-11-69, Annexure 11 for 1-12-69 to 31-1-70 and Annexure 13 for 1-2-70 to 28-2-70. In all these applications the claims were set up for refund on cccount of freight, marketing and distribution costs and packing price of the tin- containers. The details thereof were also furnished to the Dptt. The respondents refused to give the refund. Eventually the present petition was filed on 5-4-70. There was a prayer for interim orders as to stay and notice was directed to be issued, after the respondents appeared. The matter regarding stay was heard and the Bench made the following order on June 22, 1970.
“Stay refused on a statement is made for the respondent Union of India that if the final order goes against them, the excess in consonance with that order will be refused to petitioner within two months thereof”.
The matter came up for hearing and was heard on 3-9-75 and 4-9-75 and an interim order was made on 4-9-75, for it appeared that the issue in controversy was concluded by the Supreme Court judgments in A.K,.Roy v. Voltas Ltd. and Atic Industries v. Assistant Collecotr, Central Excise (AIR 1975 SC 900=1978 E.L.T. (J 44). Direction was, therefore, given to the respondents to work out the price of the goods in the light of the principles laid down by the Supreme Court. It was directed that specific affidavits should also be filed. For that from time to time, the time originally granted was extended.
4. The claim for refund is based on 3 items which are included in the price whil recovering the duty under the Act. These are as stated above (1) freight from place of manufacture to place of destination, (2) marketing and distribution cost and (3) packing, i.e. the price of tin containers in which the product is packed. These items do not consist of price on the basis of which duty can be recovered, is no more in doubt. As far as this Court is concerned, in Miscellaneous Petition No. 293 of 1974, decided on December 15, 1975, Indian Tobbaco Co. Ltd. v. Union of India 1979 E.L.T. (J 476) it has been found that marketing and distribution expenses, advertising expenses and freight cannot enter the concept of price. The Bench deciding that matter observed that the price for the purpose of levy of duty has to be worked out after excluding the post manufacturing cost and expenses. In first Appeal No. 257 of 1972 decided on Sep. 16, 1974 The Union of India v. Mansmaka Industries Pvt. Ltd., 1979 ELT (J 158). Another Bench of this Court after applying the ratio of the Supreme Court judgment delivered in A. K. Roy’s case-, emphasized that under section 4 of the Act the real value of the products has to be found out after deducting the selling cost and selling profits and that the real value can include only the manufacturing cost and the manufacturing profit. The calue of the excisable product only is relevant for the purpose od duty, and it was held that the packing cost could not be included in the value of the excisable product. We are in entire agreement in the view taken in these two decisions which mainly flow from the principles enunciated in the Supreme Court decisions mentione (Supra). There is no other possible view of the matter.
5. That being the position, the respondents were not entitled to calculate freight, marketing and distribution cost and packing cost to find out the value of the product.
6. As stated above, by an interim order directions were given to work out the items with regard to these three matters. Petitioners have filed along with affidavit the entire staement from 1-3-69 to 30-9-75 at Annexure E showing the value and the claim on that account for refund. That excess value has been worked out on the basis of including freight, marketing expenses and packing expenditure. At the end of Annexure F, the total of column 6, which is the excess duty recovered at 5% is shown which is Rs. 1932,504.44. The respondents had been given specific opportunity of verifying all these facts and an affidavit has been filed on behalf of the respondents which we propose to extract wherin it is stated :
“That without prejudice to the contentions raised in this petition by the Respondents and without prejudice to the right of appeal of these Respondents, it is submitted that the figures submitted by the petitioners calculating the excise duty liable to be refunded to the petitioner, is correct.”
Thus there is no dispute that on the basis of Annexure E if freight, marketing expenses and packing expenditure are not the part of the value of the product, the petitioners would be entitled to the amount mentioned above as a refund from the respondents and that the respondents have recovered the same during the period beginning from 1-3-69 and after the order was made on 22-6-1970.
7. As we have indicatedf above, these items could not form part of the value of the products for the purpose of duty claimable under the provisions of the Act. The new result of that finding is that there would be order directing the respondents to refund within a period of two months the sum of Rs. 19,32,504,44. There would also be a further direction to the respondents not to recover duty from the petitioner by including the above items unless law other wise permit, in the excisable value of theproduct of the petitioner.
8. Rule absolute in these terms. However we make no orders as to cost.
